Red Lobster was killed by private equity, not Endless Shrimp
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A decade ago, a hedge fund had an improbable viral comedy hit: a 294-page slide deck explaining why Olive Garden was going out of business, blaming the failure on too many breadsticks and insufficiently salted pasta-water:
https://www.sec.gov/Archives/edgar/data/940944/000092189514002031/ex991dfan14a06297125_091114.pdf
Everyone loved this story. As David Dayen wrote for Salon, it let readers "mock that silly chain restaurant they remember from their childhoods in the suburbs" and laugh at "the silly hedge fund that took the time to write the world’s worst review":
https://www.salon.com/2014/09/17/the_real_olive_garden_scandal_why_greedy_hedge_funders_suddenly_care_so_much_about_breadsticks/
But – as Dayen wrote at the time, the hedge fund that produced that slide deck, Starboard Value, was not motivated by dissatisfaction with bread-sticks. They were "activist investors" (finspeak for "rapacious assholes") with a giant stake in Darden Restaurants, Olive Garden's parent company. They wanted Darden to liquidate all of Olive Garden's real-estate holdings and declare a one-off dividend that would net investors a billion dollars, while literally yanking the floor out from beneath Olive Garden, converting it from owner to tenant, subject to rent-shocks and other nasty surprises.
They wanted to asset-strip the company, in other words ("asset strip" is what they call it in hedge-fund land; the mafia calls it a "bust-out," famous to anyone who watched the twenty-third episode of The Sopranos):
https://en.wikipedia.org/wiki/Bust_Out
Starboard didn't have enough money to force the sale, but they had recently engineered the CEO's ouster. The giant slide-deck making fun of Olive Garden's food was just a PR campaign to help it sell the bust-out by creating a narrative that they were being activists* to save this badly managed disaster of a restaurant chain.
*assholes
Starboard was bent on eviscerating Darden like a couple of entrail-maddened dogs in an elk carcass:
https://web.archive.org/web/20051220005944/http://alumni.media.mit.edu/~solan/dogsinelk/
They had forced Darden to sell off another of its holdings, Red Lobster, to a hedge-fund called Golden Gate Capital. Golden Gate flogged all of Red Lobster's real estate holdings for $2.1 billion the same day, then pissed it all away on dividends to its shareholders, including Starboard. The new landlords, a Real Estate Investment Trust, proceeded to charge so much for rent on those buildings Red Lobster just flogged that the company's net earnings immediately dropped by half.
Dayen ends his piece with these prophetic words:
Olive Garden and Red Lobster may not be destinations for hipster Internet journalists, and they have seen revenue declines amid stagnant middle-class wages and increased competition. But they are still profitable businesses. Thousands of Americans work there. Why should they be bled dry by predatory investors in the name of “shareholder value”? What of the value of worker productivity instead of the financial engineers?
Flash forward a decade. Today, Dayen is editor-in-chief of The American Prospect, one of the best sources of news about private equity looting in the world. Writing for the Prospect, Luke Goldstein picks up Dayen's story, ten years on:
https://prospect.org/economy/2024-05-22-raiding-red-lobster/
It's not pretty. Ten years of being bled out on rents and flipped from one hedge fund to another has killed Red Lobster. It just shuttered 50 restaurants and declared Chapter 11 bankruptcy. Ten years hasn't changed much; the same kind of snark that was deployed at the news of Olive Garden's imminent demise is now being hurled at Red Lobster.
Instead of dunking on free bread-sticks, Red Lobster's grave-dancers are jeering at "Endless Shrimp," a promotional deal that works exactly how it sounds like it would work. Endless Shrimp cost the chain $11m.
Which raises a question: why did Red Lobster make this money-losing offer? Are they just good-hearted slobs? Can't they do math?
Or, you know, was it another hedge-fund, bust-out scam?
Here's a hint. The supplier who provided Red Lobster with all that shrimp is Thai Union. Thai Union also owns Red Lobster. They bought the chain from Golden Gate Capital, last seen in 2014, holding a flash-sale on all of Red Lobster's buildings, pocketing billions, and cutting Red Lobster's earnings in half.
Red Lobster rose to success – 700 restaurants nationwide at its peak – by combining no-frills dining with powerful buying power, which it used to force discounts from seafood suppliers. In response, the seafood industry consolidated through a wave of mergers, turning into a cozy cartel that could resist the buyer power of Red Lobster and other major customers.
This was facilitated by conservation efforts that limited the total volume of biomass that fishers were allowed to extract, and allocated quotas to existing companies and individual fishermen. The costs of complying with this "catch management" system were high, punishingly so for small independents, bearably so for large conglomerates.
Competition from overseas fisheries drove consolidation further, as countries in the global south were blocked from implementing their own conservation efforts. US fisheries merged further, seeking economies of scale that would let them compete, largely by shafting fishermen and other suppliers. Today's Alaskan crab fishery is dominated by a four-company cartel; in the Pacific Northwest, most fish goes through a single intermediary, Pacific Seafood.
These dominant actors entered into illegal collusive arrangements with one another to rig their markets and further immiserate their suppliers, who filed antitrust suits accusing the companies of operating a monopsony (a market with a powerful buyer, akin to a monopoly, which is a market with a powerful seller):
https://www.classaction.org/news/pacific-seafood-under-fire-for-allegedly-fixing-prices-paid-to-dungeness-crabbers-in-pacific-northwest
Golden Gate bought Red Lobster in the midst of these fish wars, promising to right its ship. As Goldstein points out, that's the same promise they made when they bought Payless shoes, just before they destroyed the company and flogged it off to Alden Capital, the hedge fund that bought and destroyed dozens of America's most beloved newspapers:
https://pluralistic.net/2021/10/16/sociopathic-monsters/#all-the-news-thats-fit-to-print
Under Golden Gate's management, Red Lobster saw its staffing levels slashed, so diners endured longer wait times to be seated and served. Then, in 2020, they sold the company to Thai Union, the company's largest supplier (a transaction Goldstein likens to a Walmart buyout of Procter and Gamble).
Thai Union continued to bleed Red Lobster, imposing more cuts and loading it up with more debts financed by yet another private equity giant, Fortress Investment Group. That brings us to today, with Thai Union having moved a gigantic amount of its own product through a failing, debt-loaded subsidiary, even as it lobbies for deregulation of American fisheries, which would let it and its lobbying partners drain American waters of the last of its depleted fish stocks.
Dayen's 2020 must-read book Monopolized describes the way that monopolies proliferate, using the US health care industry as a case-study:
https://pluralistic.net/2021/01/29/fractal-bullshit/#dayenu
After deregulation allowed the pharma sector to consolidate, it acquired pricing power of hospitals, who found themselves gouged to the edge of bankruptcy on drug prices. Hospitals then merged into regional monopolies, which allowed them to resist pharma pricing power – and gouge health insurance companies, who saw the price of routine care explode. So the insurance companies gobbled each other up, too, leaving most of us with two or fewer choices for health insurance – even as insurance prices skyrocketed, and our benefits shrank.
Today, Americans pay more for worse healthcare, which is delivered by health workers who get paid less and work under worse conditions. That's because, lacking a regulator to consolidate patients' interests, and strong unions to consolidate workers' interests, patients and workers are easy pickings for those consolidated links in the health supply-chain.
That's a pretty good model for understanding what's happened to Red Lobster: monopoly power and monopsony power begat more monopolies and monoposonies in the supply chain. Everything that hasn't consolidated is defenseless: diners, restaurant workers, fishermen, and the environment. We're all fucked.
Decent, no-frills family restaurant are good. Great, even. I'm not the world's greatest fan of chain restaurants, but I'm also comfortably middle-class and not struggling to afford to give my family a nice night out at a place with good food, friendly staff and reasonable prices. These places are easy pickings for looters because the people who patronize them have little power in our society – and because those of us with more power are easily tricked into sneering at these places' failures as a kind of comeuppance that's all that's due to tacky joints that serve the working class.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2024/05/23/spineless/#invertebrates
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Private Equity (IPOs) -NewCapitalLink
Private equity firms are more focused on the long-term growth of a company compared to public equity firms.
Private investments are privately issued equity or debt securities offered by a business, from start-ups to late-stage companies investing in varied classes such as oil, mining, minerals, energy, green and ethical positions. These investments are offered through a private offering (private placement)
For decades, companies have been unable to advertise or publicly seek out investors for private investment. Only well-connected persons had access to these high yield opportunities. Therefore, many investors have never had experience of private offerings such as private placement, real estate syndications or private investment funds.
The potential for returns and obvious diversification benefits are not the only advantages of private investments, these long-term positions eliminate general concerns about the broader economy.
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Improve the alignment of public spending and private investment
with national development priorities
About the UNDP Development Finance Assessments.
WHAT IS A DFA?
A tool to help government finance the SDGs; A process of dialogue
Informed by analysis; A assessment That produces a roadmap of finance reforms.
Strengthening the alignment of State planning and finance policies
Improving the alignment of public spending and private investment with national development priorities
Opportunities to unlock new sources of financing
ANALYSIS FEATURES
Aggregation of tools/assessments for evidence based dialogue
Holistic: public and private finance & across government
Links finance to SDG planning, ongoing reforms and results -
forward looking
Focuses on both effective management and mobilisation
of financing
POTENTIAL OUTCOMES
FINANCING LANDSCAPE: Clearer picture of the public and private
financing landscape.
SHARED UNDERSTANDING: financing priorities and roles of different actors,among core public and private constituencies.
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Am I the only person alive who would find it (darkly) hilarious if Armand did erase the rest of the 70s interview memory at Louis’ request? I think we can all agree Armand has taken a lot of liberties with the truth and he’s a pretty seasoned manipulator but I’m just so amused with the idea that that was one of the only times he was telling the truth (mostly because of how hard Daniel was rolling his eyes over it and because of how insane it sounds.) it’s got that same energy as that one co-worker who’s always causing trouble who you finally call out, only to find this was the one time they weren’t responsible.
On a similar note, because of how Louis is portrayed (ie with a spotty or unreliable memory at times) and how Armand is portrayed (lying, sometimes directly and sometimes by omission) how do you think about the bits of story we get from the two of them re authenticity? I see lots of takes that just…sweep anything complex or unsavory under the proverbial ‘blame Armand’ rug or the ‘Louis’ brain is Swiss-cheese’ blanket as opposed to examining each action and element of the story through the lens of where each character is coming from in that moment. (For example, I’ve seen plenty of folks question if Louis’ memories of lestat can be trusted at all or if it’s all just Armand’s tinkering to make him look bad and just…it’s a tv show. From a practical standpoint they literally cannot rip up everything they’ve shown you. Rehashing memories can only be done some of the time or the audience gets frustrated. And from a story perspective, can’t we take Louis at his word at least some of the time until shown otherwise?)
(Side note and ironic given my ask but I wish we had half as much discourse about Louis as a capitalist and his understanding of the commodification of experiential human things such as art as we do about whether all his memories are unreliable re his romantic relationships. Thank you so much for including the gallery scene in your fic.)
Hahah, I don't think you'd be alone in finding it darkly hilarious if Louis had asked Armand to take the memory away. Hell, the ambiguity of that scene works because it's believable that Louis would ask - Louis really pendulums between heavy handed repression and unrestrained self-indulgence, and it seems like a dam burst for him that night when it came to Lestat. His name had been unuttered in their home for 23 years! And given Armand can read his mind and could clearly sense thoughts of Lestat in Paris, I imagine he's not been deliberately not thought about too. And suddenly a night with Daniel and it's all he can say! All he can think about! The pressure he's placed on the box he keeps Lestat in has loosened just enough to let it all come out!
To know Armand tried to contact Lestat, to feel his own weakness, to know Lestat might know not just his mental state but his crumbling resolve in terms of the promise he made him in Magnus' tower - - it's not hard to see him asking for Armand's help in repressing it all again.
And in terms of their authenticity in the telling of their stories - - I think it varies! I think Armand definitely and deliberately finds the truth malleable, but that doesn't mean I think he lies about everything. Like you said, he tends to prefer to omit than outright lie - like omitting Gabrielle in his recounting of 1800s Paris or the truth about San Francisco, or, I'm sure we'll discover in s3, Lestat being in Paris in the 40s.
I actually don't think he would've tampered with Louis' memories of Lestat at all though - I don't think he would've needed to. Louis is a really punishing character and Lestat's a volatile one, I don't think it would be all that hard for Louis to focus on Lestat's worse behaviour, or to allow his memory to re-write certain events with the most bad faith interpretations of Lestat's actions, thoughts or words as a means to keep him at an emotional distance. Memories aren't facts, even when we want them to be, and I think for Louis they're as malleable when he needs them to be as the truth is for Armand.
The result is that they enable each other's untruths, I think, which goes to the facade of their relationship. Louis can try and mould his memories into something that justifies his choices, and Armand can mould the truth in a way that makes their love story something more than it is, but that doesn't mean that it's entirely lies or entirely inauthentic. It's a version of a story that they've enabled in one another to perform a happiness neither of them feels, but neither knows an alternative to because Louis' grief struck, traumatised and clinically depressed and Armand has been groomed by a monster, has undealt with trauma of his own and an incapacity to be alone.
So yeah, I think a lot of it is true, it's just not a whole truth.
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